Credit Suisse flags 6,500 job cuts in 2017 after $2.4 billion loss

ZURICH (Reuters) - Credit Suisse will cut up to 6,500 more jobs in 2017, as Chief Executive Tidjane Thiam pushes ahead with a major restructuring which he said on Tuesday might now no longer include floating the bank’s Swiss business.

The plan to spin off a minority stake in the Swiss banking division was partly to raise cash to bolster the group’s capital, but this improved more than expected in the fourth quarter.

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The 2016 loss -- the bank’s second straight year in the red -- came largely on the back of a roughly $2 billion charge to settle U.S. claims the bank misled investors in the sale of residential mortgage-backed securities.

Despite the loss, Credit Suisse were up 1.4 percent by 1318 GMT, ahead of the broader European banking index.

SWISS LISTING

A man enters the Credit Suisse offices in the Manhattan borough of New York City, U.S. July 5, 2016. REUTERS/Brendan McDermid

Investors were encouraged by the bank’s better-than-expected 11.6 percent common equity Tier 1 capital ratio, which is an important measure of balance sheet strength.

“It’s the capital that surprised positively,” said Vontobel analyst Andreas Venditti, who has a “hold” rating on the shares.

Credit Suisse has faced questions over its capital levels for years, going back to Thiam’s predecessor, Brady Dougan.

In an effort to strengthen its capital, the bank had announced plans to raise 2-4 billion francs by selling up to 30 percent of its Swiss business in an initial public offering.

But there has since been speculation among some analysts and investors that the bank could reconsider selling a stake in the business, considered one of the group’s crown jewels for its profitability.

Thiam said the bank was still preparing for the IPO but left the door open to alternative options to strengthen its balance sheet “if there are ways to reach a more attractive risk/reward outcome for our shareholders”.

“The likelihood (of the IPO) has gone down,” Venditti said.

In wealth management, Credit Suisse saw net outflows in the fourth quarter as clients pulled cash to participate in tax amnesty programmes and it dropped some external asset managers.